Rising export dependence on US raises risk from Trump’s tariffs

India's growing dependence on the US for exports puts its merchandise shipments more at risk to reciprocal tariffs announced by President Donald Trump. The US’ share in India’s merchandise exports has risen from 10.1 per cent in 2010-11 to 19.3 per cent during April-February FY25.In contrast, the share of the US in India’s total exports had continuously declined from 21.7 per cent in 1998-99 to 10.1 per cent in 2010-11, shows India’s department of commerce data. The US is India’s largest merchandise export destination with shipments growing at 9.1 per cent to $76.4 billion during AprilFebruary FY25. A Parliamentary Standing Committee on Commerce suggested that India should expand its focus beyond "conventional markets" and leverage its competitive edge by exploring new areas. Emphasis on trade diversification beyond traditional partners by exploring non-traditional markets such as Latin America, Africa, and Oceania. Development of a strategic approach to enhance trade performance by identifying products with significant export potential and countries with high demand for these products.

The committee noted India's apparel exports are heavily concentrated in a few markets and recommended diversifying through Free Trade Agreements (FTAs).Monitoring export performance in key markets. Exploring new markets for diversification. Identifying potential products or sectors for expansion based on comparative advantages, trade intensity, and global demand dynamics. In 2021:1,328 items made up 20.54% of the world's import basket, yet India's supply was only 2.57% of world demand for these items.4, 271 items constituted 70.79% of the global import basket, with India’s export share at merely 0.29% for these sectors. Overall, these 5,599 items represent 91.34% of the world’s imports, while India’s export share is only 0.81% of the world's demand. India has been actively working towards diversifying its exports. The 2017 vision statement, during the mid-term review of the 2015-2020 foreign trade policy, highlighted the importance of market and product diversification, which have been beneficial during global economic downturns.